Halliburton's Interest in Cyprus
Halliburton will be using Cyprus as its base of operations for the Eastern Mediterranean. Halliburton is a giant in oilfield services providing a broad array of services and products to upstream oil and gas customers worldwide, its main competitor being Schlumberger. A deal concluded between the company and the government on Friday confirms the latter. Senior company representatives met with the Cypriot President and Cyprus’ Minister of Energy Yiorgos Lakkotrypis for this purpose.
To Cyprus, the interest of this leader in the oilfield services industry in its offshore natural gas explorations comes as a confirmation of its attractiveness as an energy hub. The island is trying to position itself as a future potential contributor to Europe’s energy security. It has adopted an onshore LNG terminal as its strategic project. Once it reaches export phase, the facility would allow the island the flexibility in the choice of the customer.
Natural gas can be paramount in improving the Republic of Cyprus’ economy, severely hit by the financial crisis. The LNG terminal and the new presence of major oil and gas companies will create new jobs and hence improve employment. Cyprus also has the ambition of becoming a key location for training and expertise in energy matters.
Cyprus has so far discovered the Aphrodite field in Block 12 of its Exclusive Economic Zone. The field has a gross mean resource of 5 Tcf, less than originally expected, and does not justify by itself the pursuit of the LNG project which costs are estimated at billions of dollars. Given that Israel has not expressed a serious interest in pooling cost and participating in the undertaking, it would require additional natural gas encounters off the island's coast to permit the effective development of the terminal.
Europe’s commitment to diversify its sources of supply is seen as an opportunity for Eastern Mediterranean countries. Whether the opportunity will be grasped depends on the timing of their entry into the energy scene.
Ahead in its offshore explorations, Israel is at a stage of drawing its energy routes to reach customers. Cyprus is awaiting the results of further exploratory drilling that will be conducted by Total and ENI/KOGAS in the year to come. Lebanon is believed to hold substantial quantities of natural gas but has not yet launched its bidding round, delayed by domestic obstacles. Lebanon is set to open its first offshore licensing round in August 2014.
Energy experts stress on the importance of regional cooperation and dialogue for the Eastern Mediterranean region to fully exploit its potential of becoming a major energy player. However, geopolitical obstacles - such as the pending maritime border dispute between Israel and Lebanon and the division of Cyprus - will first need to be resolved.
Karen Ayat is an analyst focused on energy geopolitics. Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat